Oil rises on outlook for higher demand

PABLO GORONDI Associated Press

The price of oil rose Tuesday after China's central bank injected credit into the financial system to offset concerns about slower economic growth, and experts raised their forecast for global crude demand.

U.S. crude for February delivery rose 62 cents to close $94.99 on the New York Mercantile Exchange. The February contract expires later Tuesday and most trading has moved to the March contract, which was up 38 cents to $94.97.

Meanwhile, natural gas futures rose more than 2 percent as snow and frigid air descended on the eastern part of the U.S.

The Chinese central bank announced late in the day it would inject additional money into the financial system, reducing fears of a credit squeeze. That helped to offset lingering concerns after Monday's report of slowing economic growth in China.

Also, the International Energy Agency raised its demand forecast for 2014 by 90,000 barrels a day and now sees global appetite for crude reaching 92.5 million barrels a day.

Though it remains fragile, demand from Western industrialized nations is set to rise for the first time since 2010, the Paris-based IEA said, also noting that domestic crude production in the United States in 2013 was 990,000 barrels a day higher than a year earlier.

This increase was "one of the largest annual gains on record for any country" and helped offset the impact of supply declines at other sources, like Libya and Iran, the IEA said.

"Global oil demand growth appears to have gradually gained momentum in the last 18 months, driven by economic recovery in the developed world," the IEA said in its monthly report on the oil market.

Natural gas added 11 cents, or 2.5 percent, to $4.43 per 1,000 cubic feet. A swirling storm with the potential for more than a foot of snow clobbered the mid-Atlantic and the urban Northeast on Tuesday, grounding thousands of flights, closing government offices in the nation's capital and giving students another day off from school.

That all means greater demand for natural gas to keep homes warm.

Brent crude, used to set prices for international varieties of crude, gained 38 cents to $106.73 on the ICE exchange in London.